INSURANCE-RELATED COURT CASES

COURT DECISIONS

Digested from case reports published in Westlaw,
West Publishing Co., St. Paul, MN

Can shooting victim's estate collect UM benefits?

B.J. Mough, then age 21, was riding his motorcycle when he was involved in an altercation with Chelsea Gear. Chelsea was driving her father's car, and her sister, Samantha, was a passenger.

The altercation began when Chelsea passed Mough on the right and then cut back in front of him. Mough stopped next to Chelsea at a stoplight. Chelsea perceived that he was staring at her, and she responded by making an obscene gesture toward him. She then turned right and began to drive home. Mough followed her. The parties stopped at another stoplight, and again Mough pulled up next to Chelsea. As both vehicles moved forward, Chelsea turned left and struck the motorcycle. She continued to drive, and Mough continued to follow her.

As this was going on, Samantha called her mother to inform her that she and Chelsea were being followed by a motorcycle. Richard Gear, the girls' father, waited for the girls in the driveway, holding a gun. Chelsea pulled into the driveway, and Mough rode by the house. He turned around at the end of the street, and then Richard shot and killed him. Mough's estate sued the Gear family as well as Mough's insurer, Progressive Max Insurance Company.

The policy provided uninsured motorist coverage for "damages, other than punitive or exemplary damages, which an insured person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury or property damage: 1. sustained by an insured person; 2. caused by an accident; and 3. arising out of the ownership, maintenance, or use of an uninsured motor vehicle."

Progressive argued that it was not obligated to provide coverage because Richard Gear's conduct did not arise out of the use of the covered motorcycle and, therefore, damages resulting from that conduct were not covered by the policy. The trial court found in favor of Progressive; the Moughs appealed.

On appeal, the Moughs argued that the Gears' vehicle was used to "lead their son to his death because the Gear sisters used it to leave the location of a traffic accident that obviously did not occur in the presence or vicinity of their father and his gun." According to the Moughs, if not for the Gear vehicle's having led Mough to Richard Gear, he would not have been killed.

The Court of Appeals of Georgia reviewed previous cases involving gunshots arising from the use of vehicles. It noted the general rule that "where a connection appears between the 'use' of the vehicle and the discharge of the firearm and resulting injury[,] such as to render it more likely that the one grew out of the other, it comes within the coverage defined." The court then noted that Richard Gear was never inside the Gear vehicle and that his decision to shoot Mough was independent of his daughter's use of the vehicle. The court concluded that Mough's injuries were too remote to fall within the uninsured motorist provision of the Progressive policy.

The judgment of the lower court was affirmed.

Mough vs. Progressive Max Insurance-No. A11A2185-Court of Appeals of Georgia-February 27, 2012-2012 WL 604028.

Going batty: Is guano a "pollutant"?

Joel and Evelyn Hirschhorn owned a vacation house in Lake Tomahawk, Wisconsin, that was insured under a homeowners policy issued by Auto-Owners Insurance Company. The policy provided coverage for "accidental direct physical loss," except for a pollution exclusion that excluded coverage for any "loss resulting directly or indirectly from: . . . discharge, release, escape, seepage, migration or dispersal of pollutants . . ."

The policy defined "pollutants" as "any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, liquids, gases and waste. Waste includes materials to be recycled, reconditioned or reclaimed."

In May 2007 the Hirschhorns met with a real estate broker to list the house for sale. The broker inspected the house and initially found no evidence of bats. In July 2007, upon further inspection, the broker discovered bats and bat guano. The broker attempted unsuccessfully to remove the bats and clean the house. Since purchasing the house in 1981, the Hirschhorns had arranged for a neighbor or a hired cleaner to enter the house in their absence at least once or twice a month to inspect, clean, and perform maintenance as required. July 2007 was the first time that bats and bat guano had been discovered in the house.

In August 2007 the Hirschhorns spent a week in Lake Tomahawk and noticed a "penetrating and offensive odor emanating from their home." They met with a contractor, who determined that the cause of the odor was the accumulation of bat guano between the home's siding and walls. The contractor provided a remediation estimate but could not guarantee that cleaning up the bat guano would rid the home of its odor.

The Hirschhorns then filed a notice of property loss with Auto-Owners. The notice described the loss as resulting from the discovery of bats in the house and stated that the odor made it impossible for them to stay in the house. Auto-Owners denied the claim, stating that the accumulation of bat guano was "not sudden and accidental" and that in any case it resulted from "faulty, inadequate or defective" maintenance within the terms of the policy's maintenance exclusion.

Eventually the Hirschhorns had the house demolished and later had a new house built in its place. After the demolition, in February 2008, Auto-Owners sent the Hirschhorns a revised letter adding another reason for denying the claim, specifically, that bat guano was considered to be a "pollutant" within the meaning of the policy.

The Hirschhorns filed suit against Auto-Owners for breach of contract and bad faith, claiming that the insurer was liable for the total loss of their house. They sought compensatory damages of $308,500 plus interest, punitive damages, and attorney fees and costs. Auto-Owners filed for summary judgment, arguing that the policy did not provide coverage for the Hirschhorns' loss. The trial court found in favor of Auto-Owners and dismissed the Hirschhorns' complaint; the Hirschhorns appealed.

The court of appeals reversed the decision, holding that the exclusion was ambiguous because "a reasonable insured might interpret the term 'pollutants' as not including bat guano." The Supreme Court of Wisconsin granted Auto-Owners' petition for review of the appellate court's decision. The high court found that bat guano unambiguously constituted an "irritant" or "contaminant" within the meaning of the policy. The court also found that the Hirschhorns' loss resulted from the "discharge, release, escape, seepage, migration or dispersal" of bat guano. Therefore the loss fell within the policy's pollution exclusion. The court concluded that the lower court had properly dismissed the Hirschhorns' complaint, and the decision of the court of appeals was reversed.

Hirschhorn vs. Auto-Owners Insurance Company-No. 2009AP2768-Supreme Court of Wisconsin-March 6, 2012-2012 WL 695081.

Bad day for a tractor pull

Todd Olson purchased a mobile home with the intention of moving it to a new location and asked an acquaintance, Robert Farrar, to help him with the move. Farrar hitched the mobile home to his farm tractor and began driving to the new location, eight miles distant, with Olson following in his own vehicle. The tractor stalled on a hill, and the mobile home rolled backward and crashed into Olson's vehicle.

Olson sued Farrar, claiming that Farrar did not have permission to move the mobile home more than a couple of feet. Olson alleged that Farrar was negligent because he "knew, or should have known, that his tractor was incapable of pulling [the] trailer home for approximately eight miles up and down hills and around sharp corners." According to Olson's complaint, Farrar was liable for the "extensive damage" to Olson's mobile home and vehicle.

The parties disputed the precise nature of Olson's request to Farrar for help in moving the mobile home. According to Olson, he asked Farrar to rotate the home so that it could be accessed easily by a moving company. Farrar asserted that, on the contrary, Olson had asked him to tow the mobile home the full eight miles to its new location.

Farrar tendered the defense of Olson's lawsuit to Mt. Morris Mutual Insurance Company, with which Farrar had a farmowners policy.

Mt. Morris provided a defense subject to a reservation of rights. It then asked the court for a declaration that it owed no coverage and requested dismissal of the action, claiming that two policy exclusions applied. The first excluded "'property damage' which results from the ownership, operation, maintenance, use, or occupancy . . . of motorized vehicles . . . owned and operated by . . . an insured." The policy defined "motor vehicle" as "a 'motorized vehicle,' ... and all attached machinery or equipment if: a. it is subject to 'motor vehicle' registration; or b. it is designed for use on public roads." An exception to the exclusion applied to an "Incidental Motorized Vehicle."

The second exclusion stated that coverage did not apply to " . . . damage to property that is rented to, . . . occupied by, used by, or in the care of an 'insured' . . ."

The circuit court entered judgment in favor of Mt. Morris, holding that no coverage existed under the policy because the tractor was a "motor vehicle" within the meaning of the policy. The court did not address the second exclusion. Farrar appealed.

The court of appeals reversed the decision and remanded the case to the circuit court for further proceedings. Mt. Morris petitioned the Supreme Court of Wisconsin for review, and the petition was granted.

As a preliminary matter, the Supreme Court noted that the parties agreed that (1) the tractor fell within the policy's definition of "motorized vehicle" and (2) there was no coverage for property damage unless the exception to the motorized vehicle exclusion (found in the Incidental Coverage for Motorized Vehicles) applied. The Incidental Motorized Vehicle Coverage provided, in relevant part, that Mt. Morris would pay for property damage that "result[ed] from" a "mobile home trailer," unless the mobile home trailer was "towed by, or attached to a 'motor vehicle':

"Motorized Vehicles—We pay for 'bodily injury' or the 'property damage' which: . . . b. results from: . . . (2) a utility, boat, camp, or mobile home trailer. However, this coverage does not apply to 'bodily injury or 'property damage' resulting from a trailer which: (a) is carried on, towed by, or attached to a 'motor vehicle' . . ."

Applying this language, the court noted that the first condition for coverage was that the property damage had to "result from" a mobile home trailer. Mt. Morris argued that the property damage "did not result from a mobile home trailer, but rather the failure of the tractor to pull the trailer up a hill." Farrar argued that the weight of the trailer contributed to the property damage, which he claimed was sufficient to establish that the damage did in fact "result from" a mobile home trailer. The court found that the phrase "results from" was ambiguous because it was susceptible to more than one meaning, so the term was to be construed in favor of coverage.

The second condition for coverage was that the mobile home trailer had to be attached to a "motor vehicle" (a motorized vehicle that was "designed for use on public roads").

The court concluded that the phrase "designed for use" could refer to "any conceivable purpose to which a vehicle could be put," or it could refer to a "particular purpose for which the vehicle is contrived." Because this definition also was susceptible to more than one meaning, the court construed it in favor of coverage and found that the tractor was not a "motor vehicle" within the terms of the policy.

Finally, the court considered whether the exclusion for "damage to property that is rented to, occupied by, used by, or in the care of an 'insured' . . ." applied. The court determined that unresolved factual issues precluded the entry of summary judgment in either party's favor. For all of these reasons, the court affirmed the appellate court's decision to remand the case to the lower court for further proceedings.

Olson vs. Farrar-No. 2009AP2385-Supreme Court of Wisconsin-January 31, 2012-2012 WL 266031.